Asia’s corporates are looking beyond their
domestic bases for new opportunities. The emerging and
established markets in the region offer a wide mixture of
attractions for companies to grow their presence or find new
supply chain partners. But they are not limiting their
ambitions to their own continent.

John Laurens, head of global transaction services at DBS,
says the region’s corporate sector is changing
rapidly. The biggest opportunities for banks can be found by
looking at those companies that are on the verge of
expanding.

"The middle market is seeing a lot of growth," says Laurens.
"Companies do not need to be MNC [multinational companies] size
to be global today. We are seeing the smaller businesses
selling globally, but this means they have to be sophisticated
from the very start."

China is setting the tone for how the other countries can
expand. Its corporates are maturing and looking to how they can
make the most of their treasury practices.

Amol Gupte, regional head of treasury and trade solutions,
Citi Asia Pacific, says: "Chinese companies are becoming
smarter about using liquidity. They want to optimise their own
balance sheets through pooling and intercompany lending."

Citi has assisted an Asian petroleum company in its
long-term programme to update its treasury functions. The bank
has implemented an integrated treasury system, enabling the
company to reduce financial costs, improve liquidity management
and enhance yields.

The trend is likely to spread to the region’s
other corporates. Their growing understanding of what
capabilities are available to them is also stemming from the
greater availability of data. Corporates have access to
freely-available data on their rivals, as well as the
proprietary information their banks can add.

Citi has developed its data diagnostics programme to give
clients an in-depth profile. It analyses three
years’ worth of internal data and includes
external information and credit ratings. The rolling programme
refreshes the data each quarter to maintain a three-year
analysis period.

"The future will be built on big data, but
what’s important is how you use it to create value
for clients," Gupte says. "We offer meaningful value to our
clients by crunching and analysing their data, overlaying other
important external data such as credit ratings, and then
developing real-time or event-based insights that a corporate
treasurer can use to quickly make informed decisions. We use
our own proprietary software and analytical tools for this and
constantly update the data."

DBS has a working capital advisory programme that uses big
data and analytics to create industry benchmarks and perform
deep-dive analytics on working capital. Through data analysis,
the bank can advise clients on what to do with trapped cash and
how best to make use of their available working capital.

The possibilities are not limited to the companies within
their own industry. There are opportunities for corporates to
learn from what is being experienced by corporates of an
equivalent size in a different industry.

Laurens adds: "We give the clients the opportunity to
benchmark their performance against their peers. They also have
the chance to compare against companies outside obvious
comparable industries."

Chinese companies are becoming smarter about using
liquidity. They want to optimise their own balance sheets
through pooling and intercompany lending

Amol Gupte, Citi

Across Asia, China’s continued dominance sets
the pace and the tone for the region. The country is
experiencing a turbulent time, but it still exerts a dominant
influence beyond its own borders, as demonstrated by how
renminbi for trade continues to grow. RMB is now the fifth
largest currency, according to Swift and is starting to
challenge its regional rival the Japanese yen.

"The relevance of RMB has grown over the past four years
from the trade settlement perspective," says Gupte. "It will
start to eat into the market share of other currencies in terms
of the amount of trade settlement."

China can still do more to open up the currency further,
which will lead to even greater use of its currency as it
becomes more accessible.

DBS, for example, advised European pharmaceuticals firm
Roche on its implementation of the first automated RMB
cross-border pooling structure. The company’s
international cash pooling structure enables it to manage 90%
of its global liquidity, pooled from 50 currencies.

"We will likely see more deregulation around the capital
convertibility of the RMB," Gupte adds.

Though China continues to be the driving force in the
region, it is not the only story. Shariah banking products are
growing steadily in use year-on-year. Malaysia’s
Maybank has developed and expanded its product offering to meet
the region’s increasing demand for Islamic banking
products.

In 2014 the bank launched its Islamic liquidity
concentration services, the country’s first
Shariah-compliant sweeping and pooling solution. The bank
picked up 11 clients in its first month of launch, and the
average size of deposits has increased 300% to the end of the
year. The bank has seen strong demand for the products in
Malaysia, and is now seeing that push into its neighbouring
countries.

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